The Job Corps has run a deficit of $60 million during its current budget cycle, the Senate panel said.
Sen. Robert P. Casey Jr. (D-Pa.), who chairs the subcommittee, expressed little patience for the fiscal missteps.
“This is very basic budgeting that every single public agency has to do,” he said. “If you fall short of that, you have some explaining to do.”
Oates said Job Corps expenditures have grown in recent years because the program opened three new centers and incurred substantial one-time costs for a new initiative that helped boost the number of students earning industry-recognized credentials from about 47 percent in 2010 to 77 percent in 2011.
“While these and other costs increased during the course of [the 2011 budget cycle], the extent of Job Corps’ financial difficulties went unrecognized,” Oates said.
The National Job Corps Association, a group that represents the contractors that operate Job Corps training centers, had earlier proposed budgeting options to avoid the enrollment freeze.
The group, which had members at the hearing but did not testify, recommended recouping about $24 million in cost underruns from job centers that spent less than expected during the first two quarters of the budget cycle. It also suggested shifting nearly $16 million from the program’s capital budget, which includes funds for new construction and maintenance.
Oates said the Job Corps could not recoup the cost savings because the program might need those funds in the third quarter.
Sen. Johnny Isakson (Ga.), the ranking Republican member of the subcommittee, said Oates should have transferred the funds to provide the Job Corps with short-term relief. He took issue with Oates’ reasoning, saying her budgeting method assumes the program will continually run deficits.
“I think you missed a chance to remedy your problem,” Isakson said.
Labor Department spokesman Stephen Barr said the Job Corps program is negotiating with its vendors to modify their contracts for cost savings.
The Job Corps, a 48-year-old program that started as part of President Lyndon B. Johnson’s War on Poverty, provides job training for about 60,000 disadvantaged and at-risk youths between the ages of 16 and 24. The program never halted enrollment until last year, when it stopped taking new registrants briefly during the summer and in December.
The latest enrollment freeze came just weeks before President Obama’s State of the Union speech promoting new plans for job creation, job training and middle-class growth.
In 2010, the Labor Department restructured how it handles the Job Corps, removing the budgeting and procurement operations from the Office of Job Corps and placing them in separate areas within the Employment and Training division. The program incurred a $30 million deficit during its next budget cycle.
The department told the Senate subcommittee last year that its restructuring plan would help avoid future budget problems. Instead, the cost overruns grew nearly twice as large.
Oates told the Senate panel Tuesday that her division had again taken “significant steps” to address the Job Corps’ fiscal problems, including creating an office of financial administration, hiring a senior-level comptroller and requiring job centers to submit financial reports every three days.
“I think you can understand the high degree of skepticism that this problem has been fixed, contained or dealt with,” Casey said.
Oates said the program is committed to ending the enrollment freeze as soon as possible. It originally had projected the freeze could last until the end of June.
The Labor Department’s inspector general’s office expects to complete an audit of Job Corps budgeting by May.